Federal securities law enforcers are honing their IT tools for detecting and prosecuting stock market fraud, as shown by recent enforcement actions against spammers and hackers who allegedly used the Internet in their illegal schemes.

The Securities and Exchange Commission recently suspended trading in the stock of 35 companies allegedly involved in spam campaigns aimed at rigging prices.

Operation Spamalot targeted spam blasts aimed at gulling investors into purchasing the stock of small, lightly traded companies so the alleged fraudsters could profit from the subsequent price bubble. SEC is continuing to investigate 'the accuracy and adequacy of statements' made by the 35 Operation Spamalot companies, according to Bruce Karpati, assistant regional director of the commission's Northeast Regional Office.

'We are using innovative computer forensic methods to detect and pursue the spammers, Karpati said. 'The fact is that by using our [IT] abilities, we are tracking down violators offshore.'

'When spam clogs our mailboxes, it's annoying. When it rips off investors, it's illegal and destructive,' said SEC chairman Christopher Cox. '[The] trading suspensions, and actions that will follow, should send a clear message to spammers: The SEC will hold you accountable.'

John Reed Stark, chief of the commission's Office of Internet Enforcement, offered more details on how SEC investigates computer-based stock fraud.

In a separate case from Operation Spamalot, Stark's office worked with the U.S. Attorney's Office for the District of Nebraska, as well as officials from Justice and several stock exchanges, to charge three offshore hackers with hijacking online brokerage accounts and with stock manipulation, in a case unveiled on March 12.

The alleged hackers, all Indian nationals, were charged with stealing from legitimate brokerage accounts to manipulate the stock prices of Google Inc., Sun Microsystems Inc. and 12 other companies. 'These are not [anonymous] hackers trying to tamper with the energy grid,' Stark said. 'They have to show themselves, because they want to make a profit.'

Stark said SEC investigators had relied on audit trails to 'quickly and comfortably' track down violators.

'In these situations, there are always three trails: the Internet Protocol trail, the trading trail and the money trail,' Stark said. 'If they do anything in connection with a security, we are going to know who they are, where they are and what they are doing.'

Stark said that securities law enforcers 'have some nifty ways of tracking them down, as well.

'We were able to determine that the computers used to hack into the accounts and also to make the [related] profitable trades were one and the same,' Stark said.'I think it's very difficult to'with confidence'completely cover your tracks [in these computer fraud cases],' Stark said.